Madras High Court
A. Sridhar 10 Elayalwar Koil St West ... vs R-1 M/S.L.K.P.Securities Ltd Rep By Its ... on 3 September, 2014
Author: Aruna Jagadeesan
Bench: Aruna Jagadeesan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 03.09.2014 CORAM: THE HON'BLE MRS.JUSTICE ARUNA JAGADEESAN A.Nos.1867 and 1868 of 2014 in C.S.No.78 of 2006 A. SRIDHAR 10 ELAYALWAR KOIL ST WEST SAIDAPET CHENNAI 15 ... Petitioner Vs. R-1 M/S.L.K.P.SECURITIES LTD REP BY ITS BRANCH MANAGER MR.RAJESH RANGARAJAN AND ANOTHER AUTHORISED SIGNATORY NO.21, P.S.SIVASAMY SALAI CHENNAI -4 R-2 M/S L.K.P.SHARES SECURITIES LTD., REP BY ITS BRANCH MANAGER MR.RAJESH RANGARAJAN R-3 G. RAJAGOPAL SAIDAPET CHENNAI R-4 R KALYANI 56/3 ALAMELUMANGAPURAM CHENNAI 4 R-5 R.S.R. SECURITIES PVT LTD REP BY ITS DIRECTOR R-6 S DINESH 10 ELAYALWAR KOIL ST WEST SAIDAPET CHENNAI 15 R-7 DHANAM 10 ELAYALWAR KOIL ST WEST SAIDAPET CHENNAI 15 R-8 S JAYAMANI 10 ELAYALWAR KOIL ST WEST SAIDAPET CHENNAI 15 ... Respondent A.Nos.1867 and 1868 of 2014 in C.S.No.78 of 2006 ARUNA JAGADEESAN,J.
A.No.1867 of 2014 has been filed by the 2nd defendant to dismiss the suit on the ground that the suit is hit by res judicata. A.No.1868 of 2014 has been filed by the 3rd defendant seeking to reject the plaint.
2. The respondent as plaintiff has instituted the suit against the defendants 1 to 7 for recovery of a sum of Rs.39,59,120/- together with interest at 18% per annum. The applicant/ 3rd defendant would contend that the suit filed by the plaintiffs for recovery of money against the defendants is not maintainable as the suit is barred by limitation. They would further contend that all transactions alleged in the plaint is in the year 2000 whereas the suit has been filed on 22.08.2005. It is further contended that the plaintiffs were well aware of the facts of the transactions and they have also filed Arbitration in O.P.No.724 of 2002 before NSE and the said arbitration proceedings were initiated by the plaintiffs claiming recovery of Rs.6,29,565/- against the 2nd defendant and the Arbitrator had decided the matter rejecting the claim as false bogus and frivolous. The appeal preferred by the plaintiffs was also dismissed in Appeal No.3A of 2004 by the Appellate Bench Arbitration Department, The Stock Exchange, Mumbai by order dated 09.06.2004. It is further contended that the arbitration award having given no liberty to file a civil suit while rejecting the claim of the plaintiffs, the suit filed by the plaintiffs for the same relief against the defendants is not maintainable. The second defendant prayed for dismissal of the suit on the ground that the arbitration proceedings initiated by the plaintiffs was rejected and the appeal preferred by the plaintiffs was also dismissed and the same has became final and therefore, the suit is hit by res judicata.
3. Mr.S.Veeraghavan, learned counsel for the applicant placed reliance on the judgment of Rajasthan High Court rendered in the case of Sardar Harnam Puri V. Union of India reported in AIR 2006 Rajasthan 36 in support of his contention that the separate suit for the same subject matter after adjudication of dispute by arbitrator is barred by principle of res judicata. He also placed reliance on the judgment rendered by the Division Bench of this Court reported in 2011(3) CTC 153 (N.Ravindran v. V.Ramahcandran) in support of his contention that the plaint be rejected if the suit is barred by limitation.
4. On the other hand Mr.K.Harishankar learned counsel appearing for the respondents/ plaintiffs would contend that Order 7 Rule 11(d) could be invoked if the statement made in the plaint disclosed without any doubt or the dispute that the suit is barred by any law or force and it cannot be applied in case of any disputed question. In support of the above said contention, he placed reliance on the judgment of th Honourable Supreme Court reported in 2005 (7) SCC 510 (Popat and Kotecha Property v. State Bank of India Staff Association). Learned counsel for the respondents/ plaintiffs also placed reliance on the judgment of the Honourable Supreme Court reported in 2008(12) SCC 661 (Kamala and others vs. K.T.Eshwara sa and others) wherein it is held that when rejection is sought for on the ground of barred by limitation, then such question being a mixed question of law and fact which may require not only examination of the plaint but also other evidence and the said question cannot be determined at the stage of proceedings under Order 7 Rule 11(d). In this regard, he also placed reliance on yet another judgment of the Honourable Supreme Court reported in 2007(10) SCC 59 (Ram Prakash Gupta v. Rajiv Kumar Gupta & others).
5. Heard learned counsel appearing for the parties.
6. It is settled law that for deciding the application under Order 7 Rule 11 it is only the facts pleaded in the plaint which are to be taken into account and if on the basis of those facts stated in the plaint, any of the infirmities enumerated in Rule 11 of Order 7 is disclosed, then alone, the plaint is liable to be rejected. Therefore, it is the duty of the Court under Order 7 Rule 11 to examine the plaint to ascertain whether any cause of action has been pleaded and whether any relief has been claimed against the defendant and to determine whether the plaint should be rejected. Clause 'd' of Rule 11 of Order 7 C.P.C. reads as follows:
Where the suit appears from the statement in the plaint to be barred by any law; A bare perusal of Clause (d) of Rule 1 of Order 7 CPC shows that for the purpose of invoking this clause, the suit must be barred by any law in view of the statements made by the plaintiff himself in the plaint.
7. In the instant case, I am afraid that the requirement of clause (d) of Rule 11 of Order 7 CPC is not fully satisfied because the plaintiff has stated in the plaint that the cause of action accrued to the plaintiff on 12.10.2002 when the audit report received from the plaintiff's auditor disclosed collusion and fraud on the part of the defendants 1 to 7 and subsequently. Whether this statement is or is not correct does not arise for consideration at this stage. Suffice it to say that the above mentioned statement made by the plaintiff in the plaint that the suit was within limitation as the cause of action had accrued on 12.10.2002 and the suit having been filed within 3 years i.e., 22.08.2005 does not attract the provision under clause (d) of Rule 11 of Order 7 CPC.
8. It is common knowledge that the parties may take such interpretation of law as they may be advised and in the matter relating to limitation, the plaintiff may assert that the period of limitation should be counted from a particular date. The defendant may or may not agree with such view. If the controversy arises, the Court has to decide this controversy in accordance with law, after hearing both parties and taking evidence regarding the disputed question of fact, as may be necessary. Such disputed questions cannot be decided at the time of considering the application filed under Order 7 Rule 11 CPC. In my considered opinion which gains strength from the decision of the Honourable Supreme Court reported in 2005 (7) SCC 510 (Popat and Kotecha Property v. State Bank of India Staff Association) cited supra clause (d) of Rule 11 of Order 7 CPC applies to those cases only where the statement made by the plaintiff in the plaint without any doubt or dispute shows that the suit is barred by any law in force.
9. In view of the above position of law as to the interpretation of clause (d) of Rule 11 of Order 7 CPC, I am of the view that it cannot be decided at this stage that the suit is barred by limitation. However, an issue can be framed in regard to the question of limitation and the said issue can be decided after evidence has been adduced by both parties.
10. Now coming to the plea raised by the applicant that the suit is hit by res judicata, it is alleged in the plaint that the first defendant who was the Branch Manager of the plaintiff, an employee of the plaintiff's company colluded with the other defendants and violated the company rules by not following the standard operational procedure in the matter of opening of accounts by various defendants and further fraud was played by the defendants in collusion with each other as regards which a complaint was lodged by the plaintiff before the Central Crime Branch on 26.10.2004 for the offences under section 406, 420 and 120 IPC. It is further alleged that since the 3rd defendant has colluded with the other defendants and committed fraud, the plaintiff has filed the present suit making all the defendants as parties. It is further alleged that the fraud committed by the defendants and the collusion between them was not subject matter of arbitration proceedings. Therefore, it is contended that the suit is not hit by res judicata. Whether there was actually any collusion between the 3rd defendant and the other defendants can be found out only during the course of trial of the case. Definitely that is not a ground for rejecting the plaint invoking the provision under Order 7 Rule 11 of Code of Civil Procedure.
11. Admittedly except the 2nd defendant, other defendants were not parties in the arbitration proceedings. It is well known that the res judicata is a mixed question of fact and law. It is rather well settled by authoritative decisions of the Honourable Supreme Court. It has to be specifically pleaded and the parties relying on the principle of res judicata should place before the Court all material particulars which would be sufficient to give a finding whether the particular case is barred by principle of res judicata.
12. In the instant case, in the absence of any such material at this ARUNA JAGADEESAN,J.
vsi stage, it is difficult to accept the contention that the present suit is barred by principle of res judicata. Therefore, the suit cannot be dismissed at this stage that it is hit by res judicata.
13. In view of the reasons stated above, the applications are liable to be dismissed. Accordingly, both the applications stand dismissed.
03.09.2014 vsi A.Nos.1867 and 1868 of 2014 in
C.S.No.78 of 2006